menu

Arkansas Law Review
School of Law
Waterman Hall 107
Fayetteville, AR 72701

Email: lawrev@gmail.com

Phone: (479) 575-5610



School of Law
1045 W. Maple St.
Robert A. Leflar Law Center
Waterman Hall
University of Arkansas
Fayetteville, AR 72701

Phone: (479) 575-5601

Law School Directory

Facebook Twitter Linkedin Youtube

Recent Developments

Mark James Chaney

Attorneys’ Fees—Interpreting Arkansas Law, the Eighth Circuit Holds an Award of Attorneys’ Fees Shall Be Provided to a Policy Holder Who Partially Prevails Against an Insurer’s Action Denying Its Duty to Defend the Holder

Hortica-Florists’ Mut. Ins. Co. v. Pittman Nursery Corp., 729 F.3d 846 (8th Cir. 2013).

The Eighth Circuit recently interpreted Arkansas law to consider an insurance company’s unsuccessful declaratory action denying its duty to defend a policyholder as a “judgment or decree” against the insurance company for purposes of section 23-79-209(a) of the Arkansas Code. Section 23-79-209(a) requires a court to award attorneys’ fees to the policyholder if the court finds that the insurance company improperly denied benefits The Eighth Circuit held that such an award of attorneys’ fees would not include the cost of any unsuccessful counterclaims brought by the policyholder in response to the declaratory action because such failed claims do not directly result in judgments against an insurance company.

Writing for the court, Circuit Judge Bye introduced the facts of the appeal with the following Tolstoy quote: “‘All happy families are alike; each unhappy family is unhappy in its own way.’” (Quoting Leo Tolstoy, Anna Karenina 1 (Richard Pevear & Larissa Volokhonsky trans., Viking Penguin 2001) (1877)). The opinion arose out of a series of five lawsuits amongst members of the Pittman family fighting for control of the family nursery business, Pittman Nursery Corporation (PNC) in Magnolia, Arkansas At the time this web of litigation was being spun, PNC held a package of business-coverage policies with Hortica-Florists’ Mutual Insurance Company (Hortica). When asked to defend all five lawsuits under the policies’ coverage, Hortica filed a declaratory action to clarify the scope of its coverage obligations The District Court for the Western District of Arkansas ruled that Hortica had a duty to defend PNC in three of the five lawsuits.

PNC counterclaimed for bad faith, negligence, breach of contract, breach of fiduciary duty, and punitive damages. The court dismissed the fiduciary-duty and punitive-damages claims as a matter of law. The remaining claims were tried before a jury, which returned judgments against Hortica. The district court later overturned those judgments for not being supported by substantial evidence. Finally, the district court denied all requests by PNC for a mandatory award of attorneys’ fees under section 23-79-209(a).

PNC appealed to reinstate the jury verdict, overturn the dismissal of the fiduciary-duty and punitive-damages claims, and award attorneys’ fees for the entirety of the suit against Hortica. The Eighth Circuit affirmed the district court on all issues except the denial of attorneys’ fees.

Consistent with the district court’s holding, Hortica contended that the Arkansas statute requires a policyholder to completely prevail on its coverage claim in order to trigger an automatic award of fees. Hortica relied on a previous Eighth Circuit decision in Bank of Mulberry v. Fireman’s Fund Ins. Co., 720 F.2d 501 (8th Cir. 1983), which held attorneys’ fees were only available when a policyholder recovered the exact amount sued for in a suit against his insurer over coverage. Therefore, Hortica argued that the policyholder must achieve complete victory before receiving an award of attorneys’ fees.

In partially overturning the district court’s denial of fees, the Eighth Circuit primarily based its interpretation of Arkansas law on the Arkansas Court of Appeals’ decision in S. Farm Bureau Cas. Ins. Co. v. Watkins, 2011 Ark. App. 388, 386 S.W.3d 6 The Eighth Circuit read Watkins to hold that an insurer’s failed declaratory action, affirming the insurer’s duty to defend its policyholder in a suit, qualifies as a judgment against the insurance company sufficient to trigger the statutory award of attorneys’ fees.

Although Judge Bye’s opinion does not explicitly discuss Mulberry, the Eighth Circuit appears to distinguish between a policyholder’s partial victory in affirming an insurer’s duty to defend at least one of several pending lawsuits and a policyholder’s partial victory in affirming only a portion of a larger indemnity claim (as was at issue in Mulberry). However, the Eighth Circuit’s decision in Hortica-Florists’ Mut. Ins. Co.could signal an abandonment of Mulberry. Instead, the court seems to have held that if an action determines an insurer improperly denied at least a portion of its obligation to the insured, the action will constitute a judgment against the insurer sufficient to trigger an award of attorneys’ fees under section 23-79-209 of the Arkansas Code.

Nonetheless, the Eighth Circuit upheld the district court’s denial of all attorneys’ fees incurred by PNC in bringing its counterclaims. The court agreed that such counterclaims are distinct from the initial coverage dispute and must succeed on their own right before being considered for an award of fees under section 23-79-209.

Bankruptcy—The Eighth Circuit Rejects Plain-Language Interpretation of the Bankruptcy Code, Holds a Secured Creditor’s Untimely Filing of a Claim Is Not Sufficient to Void the Creditor’s Lien Against the Debtor’s Property

In re Shelton, 735 F.3d 747 (8th Cir. 2013).

The Eighth Circuit recently held that a bankruptcy proceeding cannot void a secured creditor’s lien solely based on the creditor’s filing of an untimely claim While such an untimely filing may disallow the secured creditor’s personal claim against a debtor, it will not void a lien against the debtor’s property.

The In re Shelton opinion arose from the Chapter 13 bankruptcy filing of Gary and Elizabeth Shelton in the United States Bankruptcy Court for the Eastern District of Arkansas The deadline for creditors to file claims in the Shelton bankruptcy was January 25, 2011. Citimortgage, Inc., which held a mortgage on the Shelton’s home, did not file a claim until August 22, 2011 Shortly after Citimortgage’s late filing, both Citimortgage and the Sheltons agreed to the entry of an order disallowing the untimely claim.

After entry of the disallowance order, the Sheltons initiated an adversary proceeding in the bankruptcy court seeking avoidance of the Citimortgage lien on their home. Though the Sheltons did not contest the substantive validity of the lien or the underlying debt, they argued the lien was void under the plain language of 11 U.S.C. § 506(d), which states: “To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such a lien is void . . . .” Therefore, because § 506(d) disallowed Citimortgage’s secured claim, the Sheltons contended the lien securing that claim was void.

The bankruptcy court dismissed the Sheltons’ avoidance action under the well-established principle that substantively valid liens generally survive bankruptcy. The court cited United States Supreme Court precedent holding that a discharge in bankruptcy only affects in personam actions against a debtor, not in rem actions against property. (citing Dewsnup v. Timm, 502 U.S. 410, 418 (1992).

Additionally, the bankruptcy court noted the only circuit courts to address the issue—the Fourth Circuit and the Seventh Circuit—both rejected plain-language interpretations of § 506(d). The Fourth and Seventh Circuits reasoned that lien avoidance based solely on an untimely filing would impose “‘a disproportionately severe sanction’” upon a secured creditor that is unsupported by traditional notions of equity in bankruptcy law (quoting In re Tarnow, 749 F.2d 464, 465 (7th Cir. 1984) (citing In re Hamlett, 322 F.3d 342, 347-50 (4th Cir. 2003)). The Sheltons appealed the dismissal of the avoidance action to the Bankruptcy Appellate Panel for the Eighth Circuit, which affirmed the lower court’s ruling. The Sheltons then appealed to the United States Court of Appeals for the Eighth Circuit.

While noting the Sheltons’ position appeared valid under the plain language of § 506(d), the Eighth Circuit held such statutes must be interpreted in the context of the entirety of the Bankruptcy Code, as well as pre-Code practices Within such context, the Eighth Circuit found that the proposed plain-language interpretation would create the absurd situation where the lien of a secured creditor who files an untimely claim could be stripped, while the lien of a secured creditor who files no claim at all would be preserved. In this situation, the court reasoned, secured creditors would have to place their own property interests at risk in order to pursue a claim against a debtor in bankruptcy.

Furthermore, the Eighth Circuit agreed with the bankruptcy court that avoidance was an unduly harsh penalty for an untimely filing When a creditor files an untimely claim, the usual sanction disallows that claim against the debtors. For secured creditors like Citimortgage, disallowance means they will be unable to collect from the debtors personally if the outstanding debt is under-securitized by the property lien. Avoidance of a creditor’s lien, however, would completely strip the creditor of an otherwise valid property interest In following the Fourth and Seventh Circuits, the Eighth Circuit found the dissolution of a creditor’s property interest through lien avoidance to be an inequitable penalty unsupported by precedent or legislative history. Therefore, the Eighth Circuit upheld the bankruptcy court’s dismissal of the Sheltons’ avoidance action and adopted the interpretation that, despite the plain language of 11 U.S.C. §. 506(d), a secured creditor’s lien cannot be voided solely based on an untimely filing in a debtor’s bankruptcy proceeding.

Unauthorized Practice of Law/Arbitration—Arkansas Supreme Court Holds the Federal Arbitration Act Trumps the Judiciary’s Authority to Hear Unauthorized Practice of Law Questions When Presented as Part of a Private Action Involving a Valid Arbitration Clause

LegalZoom.com, Inc. v. McIllwain, 2013 Ark. 370, ___ S.W.3d ___ (Oct. 3, 2013).

The Arkansas Supreme Court recently held that a valid arbitration clause in a contract for legal services supersedes the court’s constitutional authority to hear questions concerning the unauthorized practice of law Instead, such questions must go before an arbitrator according to the Federal Arbitration Act (FAA). In dicta, the court suggested Arkansas law may not consider entities that offer computer-generated legal services to be lawyers; therefore, the Arkansas Rules of Professional Conduct would not apply to such entities.

In LegalZoom.com, Inc. v. McIllwain,Jonathan McIllwain paid $98.95 to LegalZoom for a will. As part of the transaction, McIllwain agreed to LegalZoom’s terms of service, which included a mandatory arbitration clause governing all disputes arising out of “any aspect of the relationship” between McIllwain and LegalZoom After entering into the contract and receiving his will, McIllwain filed a class-action suit alleging that LegalZoom violated the Arkansas Deceptive Trade Practices Act (ADTPA) by charging clients for “per se illegal conduct”— i.e., the unauthorized practice of law in the State of Arkansas. McIllwain sought reimbursement of the fees paid to LegalZoom, punitive damages, attorney’s fees, and an injunction prohibiting LegalZoom from continuing to do business in the state.

LegalZoom filed a motion to compel arbitration under the arbitration clause of the terms of service. In opposition, McIllwain relied primarily on the Arkansas Supreme Court’s opinion in NISHA, LLC v. TriBuilt Constr. Grp., LLC, 2012 Ark. 130, 388 S.W.3d 444 (2012), which held that the court has “exclusive authority to regulate the practice of law” and prohibited an arbitration panel from hearing a question of whether a non-lawyer could represent a party in an arbitration proceeding.

Furthermore, McIllwain argued the arbitration cause was unconscionable because it was part of a contract for a service LegalZoom did not have a license to provide. Finally, McIllwain asserted that such mandatory arbitration provisions for legal services are invalid because limitations of liability are a violation of the Arkansas Rules of Professional Conduct.

In response, LegalZoom first argued that since McIllwain’s claim was a private action, it did not invoke the Arkansas Supreme Court’s general regulatory authority over the legal practice. Second, LegalZoom contended that the Arkansas Rules of Professional Conduct were inapplicable because LegalZoom is neither a lawyer nor a law firm. Third, LegalZoom claimed that the court must determine the validity of an arbitration clause based solely on the terms of the specific clause and not on the overall contract Therefore, whether the contract was for an illegal purpose is a question reserved for arbitration and does not affect the arbitration clause’s enforceability Finally, LegalZoom argued that if a specific Arkansas law prohibits arbitration panels from hearing claims involving the unauthorized practice of law, the United States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), makes clear that the FAA preempts such a reservation.1

Calling this a “unique” situation, the trial court sided with McIllwain and denied LegalZoom’s motion to compel arbitration on the question of the unauthorized practice of law The trial court ruled on the basis that private contracts cannot prevent state courts from exercising their constitutional authority to regulate the practice of law. LegalZoom appealed.

In reversing the denial of the motion to compel arbitration, the Arkansas Supreme Court held that the trial court erred by interpreting the validity of the arbitration clause based on the subject matter of the underlying contract. Because the arbitration clause was enforceable, the trial court should have granted the motion to compel arbitration and left any questions regarding the legality of the substantive portions of the contract to the arbitration panel.

The McIllwain court also agreed with LegalZoom that Concepcion stands for the proposition that the FAA preempts the powers granted to the Arkansas Supreme Court by the Arkansas Constitution to reserve jurisdiction over questions regarding the unauthorized practice of law in the state.2  The court quoted Concepcion: “‘When State law prohibits outright the arbitration of a particular type of claim. [t]he conflicting rule is displaced by the Federal Arbitration Act.’” (quoting Concepcion, 131 S. Ct. at 1747).

Finally, regarding the applicability of the Arkansas Rules of Professional Conduct to the question of unconscionability, the Arkansas SupremeCourt held that such rules did not apply to LegalZoom because McIllwain did not plead facts sufficient to show LegalZoom was a practicing attorney. Additionally, the court noted LegalZoom’s contention that a computer program, not an attorney, generated McIllwain’s legal services. The court found that LegalZoom was not an attorney and, thus, was not subject to the Arkansas Rules of Professional Conduct.

In conclusion, the Arkansas Supreme Court reversed and remanded the case to the trial court for the entrance of a motion to compel arbitration However, the court also noted it would forward a copy of the opinion to the Arkansas Supreme Court Committee on the Unauthorized Practice of Law for consideration.

Writing in dissent, Chief Justice Hannah—joined by Justice Corbin, the court’s liaison to the Committee on the Unauthorized Practice of Law—contended that the majority’s opinion conflicted with the “Arkansas Constitution and several hundred years of the common law,” which grant the Arkansas Supreme Court the authority to regulate the practice of law in the state.

According to the dissent, the majority and LegalZoom erred in their application of Concepcion because the Arkansas Supreme Court’s authority to regulate the practice of law exists separately from any claim or cause of action. The dissent asserted that “nothing in the FAA preempts the court from carrying out their duties to regulate the practice of law.” Justice Hannah also contended that McIllwain’s ADTPA claim was not a necessary precondition for the court to decide the question of whether LegalZoom participated in the unauthorized practice of law in Arkansas Therefore, Justice Hannah maintained that the facts of McIllwain’s complaint—including the existence or validity of an arbitration clause—were irrelevant to such a regulatory inquiry.

The dissent concluded that when a question on the unauthorized practice of law is brought to the court’s attention, the court is “bound to act on its own regardless of whether there [is] a contract or whether any person ha[s] filed a complaint.” Furthermore, the dissent argued that the court properly exercises this exclusive regulatory duty outside the scope of the FAA.

Search and Seizure—Arkansas Supreme Court Holds Execution of Search Warrants by Officers Outside of Their Territorial Jurisdiction Without Interagency Agreement or Local Cooperation Is Not Per Se Unreasonable Under Fourth Amendment to the U.S. Constitution

State v. Robinson, 2013 Ark. 425, ___ S.W.3d ___ (Oct. 31, 2013).

The Arkansas Supreme Court recently held that the Fourth Amendment reasonableness standard for law-enforcement officers executing search warrants outside of their territorial jurisdiction does not require interagency agreements and/or local assistance Instead, courts must judge the reasonableness of a search warrant execution under a totality-of-the-circumstances standard. Furthermore, the court suggested that any consideration of the executing officers’ territorial limitation is irrelevant to such analysis.

In State v. Robinson, during the course of investigating an armed robbery at a local gas station, Sherwood police officers executed a valid search-and-seizure warrant, as well as an arrest warrant, at the home of Kendrick Robinson in an unincorporated area of Pulaski County Robinson was arrested and charged in the robbery. At trial, Robinson filed a motion to suppress all evidence gathered during the search of his home, arguing that the Sherwood officers acted outside their territorial jurisdiction without the cooperation of, or a standing interagency agreement with, the Pulaski County authorities. Therefore, Robinson contended that the extra-jurisdictional execution of the search warrant was unreasonable under the Fourth Amendment to the U.S. Constitution.3

In granting the motion to suppress, the trial court relied on Colston v. State, 346 Ark. 503, 511, 58 S.W.3d 375, 381 (2001), where a plurality held that “the traditional concept of territorial jurisdiction for peace officers is a sound one since a local community is best served by the requirement that local officers familiar with local neighborhoods make arrests in the community.” Under Colston, 346 Ark. at 511, 58 S.W.3d at 381, extra-territorial action by law-enforcement agents is only reasonable:

(1) when the officer is in fresh pursuit, under Ark. Code Ann. § 16–81–301 (1987); (2) when the officer has a warrant for arrest, as provided by Ark. Code Ann. § 16–81–105 (1987); (3) when a local law enforcement agency has a written policy regulating officers acting outside its territorial jurisdiction and when said officer is requested to come into the foreign jurisdiction, as stated in Ark. Code Ann. § 16–81–106(c)(3)–(4) (Supp.1995); and (4) when a sheriff in a contiguous county requests an officer to come into his county to investigate and make arrests for violations of drug laws.

Furthermore, Robinson and the trial court cited the Arkansas Supreme Court’s more recent opinion in State v. Fountain, 350 Ark. 437, 88 S.W.3d 411 (2002), as further support for the importance of territorial limitations in determining the reasonableness of officers’ search-warrant executions. In Fountain, the court agreed with Colston’sgeneral public-policy rationale but declined to adopt Colston’sfour bases for evaluating extra-territorial acts Instead, the Fountain court opted for a totality-of-the-circumstances standard Ultimately, however, the only factor discussed by the Fountain opinion within its nominal totality-of-the-circumstances review was the fact that out-of-jurisdiction officers worked with local authorities in executing the search warrant. Thus, the Fountain court seemingly indicated that territorial limitations and local cooperation still play important roles in the determination of Fourth Amendment reasonableness for search warrants—even though formal interagency agreements might not be explicitly required.

The Robinson trial court attempted to reconcile the Fountain and Colston precedents. The trial court explained that it reviewed the totality of the circumstances to determine the unreasonableness of the Sherwood Police Department’s extra-territorial execution of the search warrant. Nonetheless, the court noted that the decisive factor in this analysis was the absence of either an interagency agreement or any cooperation between the Sherwood Police and the Pulaski County Sheriff.

On appeal, the State contended that Fountain’s adoption of a totality-of-the-circumstances review completely overturned Colston and, thus, prohibited courts from relying solely on territorial limitations in making reasonableness determinations for the execution of a search warrant. Therefore, the State contended the trial court erred in basing its suppression order exclusively on such concerns.

In reversing the trial court’s suppression order, the Arkansas Supreme Court agreed with the State’s interpretation of Fountain as adopting a mandatory totality-of-the-circumstances test that cannot turn on territorial limitations However, the court did define a satisfactory totality-of-the-circumstances analysis on how the trial court’s reasonableness discussion in the instant case substantially differed from Fountain’s totality-of-the-circumstances analysis.

Instead, the court interpreted section 16-82-201 of the Arkansas Code and Rule 13.3(a) of the Arkansas Rules of Criminal Procedure as authorizing any Arkansas law-enforcement official to execute any valid warrant, either for search or arrest, anywhere in the state without obtaining an interagency agreement or cooperating with local authorities In fact, the court implied that local officials’ territorial limitations are completely irrelevant to the execution of warrants; therefore, courts should not consider them in their reasonableness analysis.

Estates—Arkansas Supreme Court Holds the Appointment of a Special Personal Representative to an Estate Is Voidable, but Not Void, upon the Discovery of a Disqualifying Characteristic

In re Estate of Taylor v. MCSA, LLC, 2013 Ark. 429, ___ S.W.3d ___ (Oct. 31, 2013).

The Arkansas Supreme Court recently held that courts may void the appointment of a special personal representative to an estate upon discovering a disqualifying characteristic of the representative. However, such subsequent disqualification of a representative does not automatically invalidate the representative’s actions on behalf of the estate prior to the disqualification.

On March 16, 2009, the Union County Circuit Court appointed Bobby Taylor as the special personal representative of his father’s estate for the limited purpose of investigating and prosecuting all possible claims of nursing-home abuse. On June 3, 2010, Bobby filed wrongful-death actions against several healthcare providers that treated his father, L.C. Taylor, in the months before his death. On June 8, 2011, Bobby revealed during a deposition that he was a convicted felon, which disqualified him from being a special personal representative under section 28-48-101(b)(3) of the Arkansas Code On July 28, 2011, the court removed Bobby as special personal representative and substituted his brother, Ronnie Taylor.

Subsequently, the defendants in the wrongful-death action filed a motion to dismiss the complaint as invalid in the wake of Bobby Taylor’s disqualification. Because Bobby was a convicted felon at the time of his appointment, the defendants argued that the appointment was void at its inception as a matter of law. Therefore, any action Bobby performed on behalf of the estate was invalid, and because the statute of limitations for wrongful death had since expired, L.C. Taylor’s estate would be unable to file a new action.

After a hearing, the probate court agreed with the defendants and found that since Bobby Taylor was never qualified to serve as a special personal representative due to his felony conviction, his appointment was void ab initio and any action he took on behalf of the estate, including the initiation of the wrongful-death claim, was automatically nullified.

In reversing the probate court’s decision, the Arkansas Supreme Court found such an interpretation was contrary to the plain language of section 28-1-115(b) of the Arkansas Code, which states: “No vacation or modification under this section shall affect any act previously done or any right previously acquired in reliance on such an order or judgment.” Further, the court cited section 28-48-105(b) of the Arkansas Code, which states: “The removal of a personal representative. does not invalidate his or her official acts performed prior to removal.”

In addition to the statutory language, the court noted that the probate-court record indicated that neither the probate court nor Bobby Taylor knew that he was disqualified from serving as a personal representative at the time of his appointment However, the court did not elaborate on what effect, if any, such knowledge would have had on the court’s application of the previously cited Arkansas statutes.

In conclusion, the court interpreted the Arkansas statutory language as clearly stating that any appointment of a personal representative by a probate court is voidable, but not void, upon the discovery of a disqualifying characteristic of the appointee—even if such a characteristic was in existence at the time of the representative’s initial appointment. Therefore, the court restored the Estate of L.C. Taylor’s wrongful-death action.

Joint and Several Liability/Underinsured Motorist—The Arkansas Supreme Court Reaffirms Its Precedent Requiring Plaintiffs to Exhaust the Liability Policies of All Tortfeasors Before Receiving Underinsured Motorist (UIM) Benefits, Despite the Civil Justice Reform Act’s Elimination of Joint Liability for Multiple Tortfeasors

Corn v. Farmers Ins. Co., 2013 Ark. 444, ___ S.W.3d ___ (Nov. 7, 2013).

The Arkansas Supreme Court recently reaffirmed its interpretation of the Arkansas underinsured-motorist benefits statute—section 23-89-209(a)(3) of the Arkansas Code, which requires plaintiffs to exhaust the liability policies of all possible tortfeasors before receiving coverage through an underinsured-motorist (UIM) insurance benefit The court held that this interpretation, established in 1994, was still valid despite the elimination of joint liability for multiple tortfeasors by the Civil Justice Reform Act of 2003 (CJRA).

In 2008, Opal and L.P. Corn were rear-ended by Martha Gafford after stopping suddenly to avoid debris on Interstate 540 in Rogers The debris was later discovered to have fallen off of a truck owned by Eden’s Home Repair and Remodeling and driven by Kenneth Eden. After settling with Gafford’s insurance company for $25,000 (Gafford’s policy limit), the Corns filed a claim with Farmers Insurance Company (their insurance carrier) for UIM benefits. With the UIM claim unresolved and the statute of limitations approaching, the Corns filed suit against Farmers, Eden’s Home Repair and Remodeling, and Eden as an individual Eventually, the Corns settled both of the Eden claims with Kenneth Eden’s insurance carrier for less than the $1,000,000 policy limit Because the Corns did not exhaust Eden’s policy limit, Farmers denied the Corns any UIM coverage and moved for summary judgment to dismiss the Corns’ suit.4

In support of their summary-judgment motion, Farmers argued that UIM benefits were not available to the Corns under the Arkansas Supreme Court’s decision in Birchfield v. Nationwide Ins., 317 Ark. 38, 875 S.W.2d 502 (1994). In Birchfield, the Arkansas Supreme Court interpreted the UIM statute as requiring a plaintiff to exhaust the policy limits of all possible tortfeasors before collecting UIM benefits.

The Corns argued that Birchfield no longer controlled because the 1994 decision rested, in part, on a joint-and-several-liability scheme for multiple tortfeasors that the CJRA has since eliminated. Under the previous joint-and-several-liability statute, any one defendant could be held liable for the entirety of a plaintiff’s damages, and the plaintiff could recover fully even if he had already exhausted the policy limits of one or some of the tortfeasors Because a full recovery was still possible, denying a plaintiff access to UIM benefits was not against public policy But since the passage of the CJRA, Arkansas no longer recognizes joint liability for multiple tortfeasors and each defendant is only liable for a portion of the damages based on his allocated percentage of fault Therefore, the Corns argued that the tort-law changes have eroded Birchfield’s public-policy basis and compromised the decision’s precedential value.5

In granting summary judgment, the trial court recognized Birchfield as controlling authority despite the statutory changes through the CJRA. Therefore, the trial court required complete exhaustion of all coverage limits for every tortfeasor before UIM benefits were available. The Corns appealed.

Upholding the trial-court decision, the Arkansas Supreme court recognized the impact of the tort-law shift on the ability of plaintiffs to access UIM coverage. But the court assumed the Arkansas General Assembly was aware of the existing precedent interpreting the state’s UIM statute, as such interpretations effectively become part of the statute itself. Given this assumption, the court found it had no choice but to hold that the General Assembly intended the CJRA’s several-liability provision to work in conjunction with Birchfield’s interpretation of the UIM statute The court maintained that any public-policy concerns resulting from the shift are the General Assembly’s responsibility. In fact, the court “strongly encourage[d] the General Assembly to revisit the UIM statute and the joint-and-several liability modification statute to address the issues involved in the instant case and those that have not evolved but will likely evolve.”

In dissent, Justices Hoofman and Hart noted that the majority’s decision to uphold Birchfield—in spite of the CJRA’s elimination of joint liability—could “completely eviscerate” meaningful UIM coverage in the state To illustrate this point, the dissent proposed the following hypothetical:

[A]ssume Tortfeasor A has a liability-insurance policy of $25,000 and is attributed 95% of the fault of the accident, while Tortfeasor B has a policy limit of $1 million and is attributed 5% of the fault. In this situation, Tortfeasor A is grossly underinsured, but Tortfeasor B is not underinsured at all If the insured suffers damages from the accident in an amount less than $1 million, the UIM coverage will never be triggered because it will be impossible to fully exhaust the policy limits of both tortfeasors, and the insured will not be adequately compensated for his or her damages.

The dissent suggested that courts should calculate underinsurance—and, therefore, the plaintiff’s access to UIM coverage—under the UIM statute consistent with how they calculate liability under the CJRA: apportioned individually by each tortfeasor based on his or her allocated percentage of fault.


Notes

[1] In Concepcion, the United States Supreme Court held the FAA preempted a California statute that deemed all class-arbitration waivers included within a contract of adhesion invalid upon a finding that such contracts were part of a scheme to defraud a large number of people for small amounts of money.

[2] The McIllwain court did not reconcile NISHA with its interpretation of Concepcion, nor did it distinguish the facts in the instant case from the facts in NISHA.

[3] Robinson also alleged such activity violated article 2, section 15 of the Arkansas Constitution and that such protections were stronger than those provided by the Fourth Amendment However, the Arkansas Supreme Court declined to address this argument because Robinson did not raise it at the trial-court level.

[4] The court assumed, for the purposes of the summary-judgment motion, that the Corns’ total damages were in excess of the amount recovered and that Gafford was, in fact, underinsured.

[5] The Corns also submitted alternative arguments regarding the ambiguity of their UIM policy language, which are not addressed here.